Disability Law

The Ticket to Work and Work Incentives Improvement Act:An


by Mark McWilliams

Americans live in a prosperous time. Over 19 million new jobs have been created since 1992.1 Michigan has enjoyed its share of benefits from the robust economy, with relatively low overall unemployment and incidence of poverty.2

Amid these riches, individuals with disabilities remain, by and large, persistently underemployed and living in poverty. Lacking equal employment and income, many people with disabilities face additional barriers to improving their quality of life. This article will discuss the newest "E" (employment) ticket3—the Ticket to Work and Work Incentives Improvement Act, the most recent federal effort to make employment more attainable for adults with disabilities.

THE EMPLOYMENT PICTURE

Unemployment for adults with disabilities in the workforce is three times that of adults without disabilities. Recent data shows that 9.7 percent of adults with disabilities between the ages of 25 and 64 are unemployed, compared to 3.2 percent of adults in the same age group without disabilities.4 Unemployment rates tell only a small part of the story, however, because they measure both part- and full-time work and only measure unemployment among members of the labor force. Only 17.3 percent of adults with disabilities ages 25-64 work full-time, compared with 73.3 percent of adults in the same age group without disabilities.5 Moreover, 70.9 percent of adults 25-64 with disabilities describe themselves as "outside the labor force," while only 13.7 percent of adults in the same age group without disabilities describe themselves that way.6

Drastic differences in employment status translate into differences in income. Census data shows that, among adults ages 25-64, mean income in 1998 was $20,422 (including public benefits) for people with disabilities and $35,221 for people without disabilities.7 The combination of lower employment and earnings means higher poverty—people with disabilities are twice as likely to live in poverty as people without disabilities.8

The 2000 NOD/Harris Survey of Americans with Disabilities found that "people with disabilities are much more likely to live in poverty with very low household incomes of $15,000 or less (29 percent v. 10 percent)."9 The survey reported corresponding differences in education, health care, transportation, entertainment and socializing, political participation, life satisfaction, and optimism for the future. The survey’s author concluded: "all...of the life indicators are interconnected....[A]s one indicator improves, others will follow, and conversely, as one declines, others will also decline."10

Despite the gaps in employment and income, 63 percent of adults with disabilities believe that their lives have improved over the past decade, and 41 percent expect their quality of life to improve in the next four years.11 This optimism is supported by an improving employment picture. Changes in assistive and adaptive technology, a strong economy, advances in education, medicine and rehabilitation, and the enactment of civil rights laws such as the Americans with Disabilities Act have opened employment possibilities up for more Americans with disabilities.12

FEDERAL PROGRAMS AND CURRENT WORK INCENTIVES

The federal government has responded to these statistics in recent years with a host of incentives to make it possible for individuals with disabilities to work. Most of these incentives affect two Social Security programs—the Old Age, Survivors, and Disability Insurance program (SSDI)13 and the Supplemental Security Income (SSI) program.14

SSDI provides cash benefits for individuals with disabilities who are "fully insured," for example, individuals under 65 who have amassed 40 calendar quarters of earnings.15 The benefit amounts vary depending on the earnings history. SSDI also provides benefits in some situations to selected family members (spouse, children, parents) of fully insured individuals.16 SSDI is provided without income or resource limitations.

SSI provides basic income (currently $512 per month) for individuals with disabilities when those disabilities prevent them from working. SSI recipients must have limited income and resources.17 Together, Social Security pays approximately $5.1 billion in cash benefits to SSDI and SSI recipients each month.18 In addition, both SSDI and SSI carry an entitlement to health insurance. SSDI recipients receive Medicare after 24 months of eligibility, while SSI recipients receive Medicaid from three months prior to the date of application.19

Under both SSDI and SSI, an individual has a disability if a medically determinable physical or mental impairment lasting more than 12 months prevents that individual from performing substantial gainful activity (SGA).20 SGA is evaluated using a number of factors, including a threshold earned income (currently $700 per month, recently increased), a complex listing of disabilities that presumptively limit a person’s ability to work, and a functional analysis of a person’s actual ability to do any kind of work.21

Social Security may conduct a "continuing disability review" to determine ongoing eligibility for either SSDI or SSI.22 These reviews are conducted periodically for certain medical conditions or are initiated by certain events, such as a return to work, medical improvement, or changes in vocational technology or treatment.23

Critics point out at least two fundamental disincentives to work, in the SSDI and SSI programs. First, qualifying for the program requires applicants to demonstrate emphatically that they cannot work in anything but a minimal (earning less than $700 per month) capacity. Any work activities directly affect a person’s continued eligibility for benefits.24 Second, the programs carry vitally important health coverage, which surveys show is an "overriding issue" in a person’s ability to work.25 Whether from these disincentives or other factors, fewer than one percent of SSDI recipients and few SSI recipients leave the programs to return to work each year.26

SSDI and SSI have a number of incentives to counteract these problems. Both SSDI and SSI recipients may deduct out-of-pocket "impairment related work expenses" from countable income for the reasonable costs of items and services necessary for work.27 SSDI recipients are entitled to a "trial work period," which allows them to work for nine months while still receiving benefits.28 Further, SSDI recipients may receive extended eligibility in which they may have benefits reinstated in months when they are not working.29 Finally, SSDI recipients receive extended Medicare Part A (hospitalization) coverage for four years from when they begin working.

Under SSI, half of a person’s earned income, plus the first $65 per month, is disregarded in determining financial eligibility.30 As a consequence, SSI recipients whose earned income exceeds the SGA level may still receive some cash benefits until their countable income equals the SSI federal benefit rate (for an individual, this "break-even point" is $1,109 per month).31 Further, SSI recipients who become ineligible for cash benefits because of work earnings can still qualify for Medicaid under the 1619(b) program.32 SSI recipients may also establish Plans to Achieve Self Support (PASS) in advance to shelter earned income for career expenses.33

Under current regulations, Social Security must refer many SSDI and SSI applicants to the state vocational rehabilitation agency, which in Michigan is the state Department of Career Development/Michigan Rehabilitation Services (MRS).34 MRS provides a range of services to achieve employment outcomes under Title 1 of the federal Rehabilitation Act.35 Social Security reimburses MRS for the cost of vocational rehabilitation services when an SSDI or SSI recipient engages in substantial gainful activity for a continuous period of nine months.36

Current regulations provide sanctions, including loss of benefits, for SSDI or SSI recipients who do not take advantage of offered vocational rehabilitation services.37 If a person contacts MRS and is refused services, however, the person may use an "alternate provider" who may then provide services and be reimbursed under the same criteria as an MRS client would be for a successful work outcome.38

THE TICKET TO WORK AND WORK INCENTIVES IMPROVEMENT ACT (TWWIIA)

Even with this collection of incentives, the General Accounting Office concluded in 1999 that SSDI program incentives "played a limited role in beneficiaries’ efforts to become employed."39 Fewer than nine percent of Michigan SSI recipients (16,674) work.40 Of those who work, just over 27 percent (4,561) use Section 1619 benefits, while only 16 people have Plans to Achieve Self Support and 318 people claim impairment-related work expenses.41

In this context, TWWIIA was passed by Congress and signed by the president into law in late 1999.42 TWWIIA features the following changes and additions to current law:

The "Ticket To Work"

TWWIIA repeals the requirement that Social Security refer recipients to vocational rehabilitation agencies and repeals the authority to sanction recipients for not using vocational rehabilitation services. In place of these provisions, the act creates a new voluntary entitlement program called the "Ticket to Work."43 Social Security will implement the Ticket to Work program in phases; all states must be covered within four years of passage.

Any person receiving SSI or SSDI may ask for a ticket.44 The ticket allows the holder to gain access to vocational rehabilitation and other employment support services from a series of "employment networks"45 that are selected by Social Security with the assistance of contracted "program managers." The program managers are responsible for recruiting, recommending, and monitoring the employment networks.46 They are selected through a competitive bidding process and may not provide other employment support services under the act.47

Employment networks may consist of single providers or groups of providers. MRS and other state vocational rehabilitation agencies, as well as "one-stop career centers" created under the Workforce Investment Act may apply to become employment networks.48 Employment networks must meet standards for staff professional and educational background, and must demonstrate expertise in providing employment services and supports.49 However, unlike many managed care programs, Social Security must enter into an agreement with any participant who agrees to serve as an employment network, and Social Security may not limit the number of employment networks in a particular area.50

Employment networks must provide employment services and supports under an appropriate "individual work plan."51 The work plan, developed with the consent and active participation of the person using the services, must include statements of vocational goals, services to meet those goals, the "terms and conditions" related to providing services and supports, and an understanding of rights and remedies available to the customer.52 Services available under the plan include case management, work incentive planning, supported employment, career planning and development, vocational assessment, job training, placement, follow-up services, and others to be defined.53

Employment networks are reimbursed when a customer is working or attains work "milestones."54 The network chooses which system it will use. Payments come from Social Security and may not exceed 40 percent of the average monthly disability benefit payable to all beneficiaries.55 Networks may not charge people who use their services.56

The networks must agree to provide services within specified geographic areas and must subject themselves to quality assurance reviews and financial reporting requirements.57

Limits on Continuing Disability Reviews

TWWIIA ends continuing disability reviews for ticket holders.58 TWWIIA also prohibits Social Security from initiating continuing disability reviews for long-term SSDI recipients (for example, people receiving benefits for more than 24 months) solely because of work activity.59

Reinstatement of Benefits and Provisional Benefits

TWWIIA expands the period for reinstatement of benefits by an extra 60 months beyond the current periods for both SSDI and SSI.60 TWWIIA also provides for expedited reinstatement of benefits, including a six-month "no questions asked" provisional benefit paid during a reinstatement evaluation, which is not subject to recovery through the overpayment process.61

Extended Eligibility for Medicare Benefits for SSDI Recipients

TWWIIA expands the extended period of free Medicare Part A eligibility from the current four years to eight and a half years for SSDI recipients who are working. Medicare Part B is also available upon payment of the current premium.62

Expanded Optional Medicaid Eligibility

TWWIIA adds two new optional Medicaid coverage categories—the "basic insurance group" and the "medical improvement group."63 These are optional categories and do not replace any of the existing categories, including the 1619(b) program and the state option to add coverage for working people with disabilities earning up to 250 percent of poverty. The "basic insurance group" allows people age 18-64 with earned income beyond 250 percent of poverty to "buy into" Medicaid on a sliding scale. States may elect to provide eligibility to this group; if they do, they may also cover the "medical improvement group," which includes employed with disabilities who show medical improvement but still have a severe medically determinable condition. "Employed" means working for pay at least 40 hours per month.64

States may limit income or resources for eligibility under either category as they see fit, subject to some limitations. If a person earns more than 250 percent of poverty, the state may require payment of a full premium. The premium amount is limited to 7.5 percent of income for individuals earning between 250 percent and 450 percent of poverty, and not limited after that. Individuals earning over $75,000 per year must pay the full premium.65

Demonstration Projects, Grants, Information, and Advocacy

TWWIIA establishes a Work Incentives Advisory Panel, an outreach program featuring trained employment services representatives (ESRs), information, and advocacy through the protection and advocacy system, and various grants and demonstration projects, including demonstration projects for medical assistance to people with severe disabilities, "infrastructure" grants to develop state capacity to provide supports to working people with disabilities, and extended authority for ongoing demonstration projects. In addition, TWWIIA mandates studies and reports to Congress, both from Social Security and the General Accounting Office.

POTENTIAL ADVOCACY ISSUES

There is no question that TWWIIA offers increased opportunities for adults with disabilities to work. The act also suggests a number of potential advocacy issues.

Enhancing consumer choice is a paramount purpose of the act. For example, Section 2 states:

providing individuals with disabilities real choice in obtaining the services and technology they need to find, enter, and maintain employment can greatly improve their short and long-term financial independence and personal well being.

A challenge for advocates will be to maintain the "choice" aspects of the ticket to work so that individuals may truly have a range of choices in using the ticket to obtain vocational supports.

The "ticket to work" program, while opening up services to alternate providers, also contains potentially choice-limiting provisions. For example, the qualification and quality assurance standards and rate structures for employment networks are subject to restrictive interpretations and could be used to limit the number of qualifying providers. Similarly, the scope of services available under individual work plans could be limited in practice to reduce flexibility and consumer choice. Consumers and advocates must be aware of these potential limitations that are contrary to the intent of the act but could be used to limit the cost of the program or increase short-term budget savings.66

Closely related to choice is a specific quality assurance issue for employment networks using the "outcome milestone" payment method. Unlike the outcome payment system, the milestone system allows employment networks to be paid even if their customer never works, merely by offering milestones that may or may not relate to a person’s actual ability to work. Customers and advocates should be careful to ensure that Social Security promotes robust quality assurance in this area.

Next, in delegating the responsibility to private organizations to provide public services, it is critical that procedural safeguards, dispute resolution mechanisms, and enforcement responsibilities be clearly spelled out. Are employment networks engaged in state action? Can customers act privately to enforce the agreements between Social Security and a network if there is a violation? Must customers use internal network dispute resolution mechanisms, or can they go directly to Social Security? Are independent civil rights actions available? Although the upcoming regulations may answer these questions, consumers and advocates need to ask them.67

Another provision bars a continuing disability review based on work earnings. This section, while critical to maintain a person’s benefits while working, may raise advocacy issues because eligibility for Social Security is essentially based on a person’s ability to work, and it is not clear how that ability will be evaluated without looking at a person’s work history.68 How will the state Disability Determination Service look at disability now that there are some restrictions for those who already work?

Most of the 10 standards for initiating continuing disability reviews are related either to changes in medical condition or changes in work situations. Consumers and advocates must be wary of a return to the medical model for determining disability; the current regulations leave no other recourse but to evaluate a person’s medical condition in deciding whether the person still qualifies for benefits.69

The benefits from expanded Medicaid coverage will not be realized unless states adopt the optional coverages in some form. A number of states, including Minnesota and Wisconsin, provide premium-based Medicaid coverage to working people with disabilities. Since the coverage is optional, there are no mandatory strategies.70

Many of these issues have yet to be resolved. Without question, it will be a wild ride.

Footnotes

1. Re-Charting the Course: If Not Now, When?, Second Report of the Presidential Task Force on Employment of Adults With Disabilities 3 (November 15, 1999).

2. Dalaker, U.S. Census Bureau, "Current Population Reports," Series P60-207, Poverty in the United States: 1998 (1999). See also National Organization on Disability, "The 2000 N.O.D./Harris Survey of Americans with Disabilities," www.nod.org/hs2000.html

3. As readers over 40 may remember, an "E" ticket at a carnival or amusement park admitted one to the fastest, most exciting rides. For purposes of this article, "E" stands for employment.

4. Dalaker, supra.

5. Id.

6. Id.

7. Id.

8. McAlees, Meeting Future Workforce Needs: Twenty-Fifth Institute on Rehabilitation Issues 19 (May 1999), citing to Kruse, "Persons With Disabilities: Demographic, Income, and Health Care Characteristics," 121 Monthly Labor Review 8-15 (September 1998).

9. National Organization on Disability, "The 2000 N.O.D./Harris Survey of Americans with Disabilities," www.nod.org/hs2000.html

10. Id.

11. Id.

12. Id.; see also Cong Rec HR 10256 (Oct. 19, 1999) (statement of Rep. Shaw).

13. 42 USC 203 et seq., 20 CFR Part 404.

14. 42 USC 1601 et seq., 20 CFR Part 416.

15. 20 CFR 404.315. Benefits begin after a five-month waiting period. Id. For individuals over 65, disability benefits automatically convert into old age benefits. 20 CFR 404.316.

16. See 20 CFR 404.330 (spousal benefits), 20 CFR 404.335 (widow/widower benefits), 20 CFR 404.350 (child benefits), 20 CFR 404.370 (parent benefits).

17. 20 CFR 416.110.

18. Testimony of Cynthia M. Fagnoni, U.S. General Accounting Office, before the House Ways and Means Committee, Social Security Subcommittee, GAO/T-HEHS-99-82, 3/11/99 at 1.

19. Social Security Act, Section 1811 (SSDI/Medicare); Section 1902(a)(10)(i) (SSI/Medicaid).

20. 20 CFR 404.1505 (SSDI); 20 CFR 416.905 (SSI for adults).

21. 20 CFR 404.1520 (SSDI); 20 CFR 416.920, 416.920a (SSI for adults). Both programs refer to the listing of impairments contained in 20 CFR Part 404, Subpart P, Appendix 1.

22. 20 CFR 404.1589 (SSDI); 20 CFR 416.989 (SSI).

23. 20 CFR 404.1590 (SSDI); 20 CFR 416.990 (SSI).

24. "Because a disability determination results in either a full award of benefits or a denial of benefits, applicants have a strong incentive to overstate their disabilities to establish their inability to work and thus qualify for benefits. Conversely, applicants have a disincentive to demonstrate any capacity to work because doing so may disqualify them for benefits." Fagnoni, supra at 5.

25. Id. at 9. "[According to respondents to a GAO survey of working SSDI recipients], health interventions—such as medical procedures, medications, physical therapy, and psychotherapy—reportedly helped beneficiaries by stabilizing their conditions and, consequently, improving functioning. Not only were health interventions perceived as important precursors to work, they were also seen as important to maintaining ongoing work attempts." Id. at 7.

26. Id. at 1.

27. 20 CFR 404.1576 (SSDI); 20 CFR 416.976 (SSI). The deductions affect both SGA and income determinations under SSI, but only the SGA determination under SSDI (since there is no income threshold under that program).

28. 20 CFR 404.1592.

29. 20 CFR 404.1592a.

30. 20 CFR 416.1112. These provisions are on top of the general $20 per month all income exclusion. See 20 CFR 416.1124(c)(12).

31. 20 CFR 416.261, also known as the "1619(a)" exclusion.

32. 20 CFR 416.264-269, also known as the "1619(b)" provision. Under this program, a person may continue to receive Medicaid so long as he would otherwise qualify for SSI except for earnings, needs Medicaid to continue working, and earns less than a "reasonable equivalency of benefits." "Reasonable equivalency of benefits" usually is set using a state-by-state "threshold" level of average Medicaid and SSI expenditures per recipient. In Michigan, the 2000 threshold is just over $20,000 per year. A person whose income exceeds the threshold can submit an individualized request.

   Under the Balanced Budget Act of 1997, the Federal government gave states the option to extend Medicaid coverage to individuals whose net income is less than 250 percent of poverty (for an individual, approximately $20,600 per year). States could charge premiums for this coverage for individuals who otherwise would not qualify for Medicaid. Michigan has not exercised this option, perhaps because Michigan’s current 1619(b) threshold provides roughly the same benefit.

33. 20 CFR 416.1180.

34. 20 CFR 404.2104(c) (SSDI); 20 CFR 416.2204(c) (SSI).

35. 29 USCA 701 et seq. MRS provides services including assessment, counseling, referral, job-related supports, vocational planning, supplemental medical diagnosis and treatment, maintenance, transportation, personal assistance services, interpreters, rehabilitation teaching, licenses, tools and equipment, startup technical assistance, technology, transition services, supported employment, family supports, and retention assistance. 29 USCA 723. These services are provided to meet goals established in an "individualized plan of employment" and are subject to procedural safeguards and dispute resolution mechanisms. 29 USCA 722.

36. 20 CFR 404.2101 (SSDI); 20 CFR 416.2201 (SSI).

37. 20 CFR 404.316 (SSDI); 20 CFR 416.213 (SSI).

38. 20 CFR 404.2104(f) (SSDI); 20 CFR 416.2204(f) (SSI).

39. Fagnoni, supra, at 10-11.

40. Social Security Administration, "Quarterly Report on SSI Disabled Workers and Work Incentive Provisions" (June 1999).

41. Id.

42. PL 106-170 (Dec. 17, 1999). TWWIIA is not to be confused with the Workforce Investment Act (WIA), PL 105-220, which was passed in 1998 and requires states to blend employment resources into "one-stop" career centers where all vocational support services, including vocational rehabilitation services for people with disabilities, are provided. The interim final regulations (29 CFR Part 37) require career centers to ensure access and prohibit discrimination in their operations.

   An excellent, detailed analysis of TWWIIA has been prepared by the Center for the Study and Advancement of Disability Policy at the George Washington University School of Public Health and Health Services. For more information on this study, please contact Robert Silverstein at (202) 496-8452 or Allen Jensen at (202) 530-2319.

43. Section 101 of the act adds a new Section 1148 to the Social Security Act containing most of the "ticket to work" provisions.

44. Social Security Act, new Section 1148(j).

45. Id., new Sections 1148(a), 1148(b), 1148(f).

46. Id., new Section 1148(e).

47. Id. Michigan recently used a similar process to convert primary Medicaid services to a managed care system.

48. Id., new Sections 1148(d), 1148(f).

49. Id., new Section 1148(f).

50. Id., new Section 1148(d).

51. Id., new Section 1148(f)(1)(D).

52. Id., new Section 1148(g).

53. Id., new Section 1148(e)(5). Noticeably absent from the list is sheltered employment.

54. Id., new Section 1148(h).

55. Id.

56. Id., new Section 1148(b)(4).

57. Id., new Sections 1148(d), 1148(f).

58. Id., new Section 1148(i).

59. PL 106-170, Section 111; Social Security Act, revised Section 221(m).

60. PL 106-170, Section 112; Social Security Act, revised Sections 223(i), 1631(p).

61. Id. Current law allows recipients to seek a waiver of any overpayment received from Social Security upon a showing that the recipient was not at fault and collection would defeat the purpose of benefits or otherwise be against equity and good conscience. See 20 CFR 404.506, 416.550.

62. PL 106-170, Section 202; Social Security Act, revised Section 226(b).

63. Id., Section 201; Social Security Act, revised Section 1902(a)(10)(A)(ii)(XV-XVI).

64. Id., revised Section 1905(v).

65. Id., revised Section 1916(g).

66. One can argue in the face of potential cost-cutting measures that TWWIIA itself is a cost-cutting statute, in that it reduces the overall cost of the SSDI and SSI programs, but that employment services and supports must be effective (fully available based on the choice of the consumer) for the cost savings to be realized. See Sec. 2(a)(11).

67. One need only refer to the bewildering array of process in Michigan’s managed system for publicly funded general and specialized health care services as an example. In this system where, like TWWIIA, program managers identify private provider networks who then provide services under individualized plans, real choice is nonexistent because of the limited number of providers, and disputes are subject to resolution through at least seven different processes.

68. In Cleveland v Policy Management Systems, 119 S Ct 1597 (US 1999), the U.S. Supreme Court found that a person who is claiming disability based on an inability to work can also be a qualified individual with a disability for ADA purposes. The section of TWWIIA which limits continuing disability reviews raises a similar dilemma faced by the Supreme Court—how can a person be able to work yet receive benefits based on an inability to work? No doubt the regulations will help resolve this problem.

69. 20 CFR 404.1590 (SSDI); 20 CFR 416.990 (SSI).

70. Query whether the "integration mandate" of the ADA can be used to encourage state adoption of additional Medicaid services to promote community inclusion. See generally L C v Olmstead, 119 S Ct 2176 (US 1999). Recent cases, unfortunately, have declined to extend Olmstead to require states to adopt additional new services. See, for example, Rodriguez v City of New York, 197 F3d 611 (CA 2, 1999), citing Olmstead, 119 S Ct at 2188 n 14.



Mark McWilliams is director of Information and Referral Services with Michigan Protection and Advocacy Service (MPAS). MPAS is the protection and advocacy agency serving individuals with disabilities in Michigan. The MPAS Information and Referral Team provides information and assistance to thousands of people each year on disability-related matters. McWilliams has worked with individuals with disabilities in the protection and advocacy system in Michigan, California, and West Virginia since 1986. He got his JD from the University of California Hastings College of Law in 1985, is an active member of the Bar, and teaches Alternative Dispute Resolution at Thomas M. Cooley Law School. He lives with his family in Eaton Rapids.


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